The government plans to make bank executives accountable for their actions and decisions even after retirement.
"It has been felt desirable to draft rules and regulations which would govern the conduct of Board level appointees in public sector banks, during their tenure as well after retirement from the Boards," department of financial services wrote to the public sector enterprises board (PSEB) last month.
At present, only serving chairmen, managing directors and executive directors face disciplinary proceedings.
"In case, an officer is found guilty of any misconduct and in the meantime he retires from the Board, the department has no option, but to issue a 'displeasure', which may not serve any purpose," the financial services department said in its communication to the PSEB.
This is in contrast to the rules governing other public sector enterprises, where whole-time board level appointees are accountable even after retirement, for decisions taken during service.
The financial services department will now frame new rules for bank chairmen, managing directors and executive directors modelled on regulations governing top executives of other public sector undertakings.
The move to frame new guidelines was initiated after the Central Vigilance Commission (CVC) pointed out irregularities in decisions taken by a former Central Bank of India chairperson.
"We are framing new rules for board-level appointees of public sector banks," a senior government official said on the condition of anonymity.
The new rules will also be armed with rules to prevent "bribery" by bank executives to favour customers who do not qualify for loans otherwise.
Public sector banks and financial institutions have been rocked by a slew of allegations after the Central Bureau of Investigation's recent revelations that a few top executives of government-owned lenders had taken bribes to sanction loans to corporations circumventing rules.
Finance minister Pranab Mukherjee has asked banks to ensure that all procedures and due diligences consistent with guidelines are adhered to while approving loans.